Exploiting Continuous Improvement to Achieve Transformation and Efficiency Goals: Part 1

Utilities are facing a complex set of challenges in today’s environment. Aging infrastructure (and the resulting requirement of large-scale capital investment), increasingly stringent regulatory requirements, growing cyber and physical security concerns, and resistance to rate increases are prominent examples of factors influencing utility planning and decision-making.

At the same time, the sector is undergoing a significant and unprecedented transformation, facilitated by the introduction of new and disruptive technologies and the consideration of new and innovative business and revenue models. At the center of this transformation is the fundamental shift in how electricity is generated and distributed, and the evolution of the traditional relationship among stakeholders across the electrical grid, particularly between utilities and their customers. Linear value chains supporting one-way power flow from centralized generation to end customers will give way to a more sustainable, highly digitized, and dynamic energy system. Moving toward a multidirectional network of networks and away from a linear hub-and-spoke model, this system will support two-way energy flows in which customer choice (optionality), clean energy, innovation, and agility command a premium.

Redefining How Utilities Work

Transforming the business to deliver on both objectives is presenting decision makers with a challenge. Importantly, both strategic transformation initiatives and operational efficiency programs necessarily impact and redefine a utility’s “ways of working.” How these dual objectives are achieved is critical, given that a utility’s core services, its stakeholders, business processes, organizational design, workforce and talent management, and other facets of human capital are altered as a result of these efforts.

In this environment, utilities must be able to continuously improve performance, while also identifying and successfully delivering on programs that achieve the desired transformation results across all planning horizons. The discipline of Continuous Improvement will play a significant role in helping utilities to do more with less—and also in helping them transform to address new technologies, regulations, and other disruptive forces. Existing Continuous Improvement teams, methods, and infrastructure can help utilities address key transformation questions, including:

• Identification: What set of initiatives are required?
• Prioritization: Which initiatives are most critical?
• Coordination: What is the proper phasing of our efforts?
• Integration: How do we integrate the new—and ongoing—initiatives?
• Change: How do we introduce change techniques across the portfolio of initiatives?

Join Guidehouse at the Process Excellence and Continuous Improvement for Utilities Conference (West) to learn more. During the conference, we will discuss the role of change management in successfully implementing business process and technology innovations (among other topics). Meanwhile, look for our next blog, in which we will discuss the differences—and linkages—between Innovation and Continuous Improvement.